Are you planning to pass on an inheritance to your family? First, read this sage advice from Warren Buffett

This article is for educational purposes only and does not constitute legal advice. For advice regarding your personal situation, please contact an attorney.

One of the most successful and famous stock pickers of all time, Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) Founder and CEO Warren Buffett is always full of advice about investing in stocks.

The famous financier’s statements on other financial topics receive less attention. That’s a shame, because there’s a lot of wisdom in these statements too. Recently, Buffett suggested a crucial step that everyone should take in estate planning, and his advice is worth heeding.

The sharing principle

In a statement that was entirely consistent with the popular advice Buffett often dispensed, he wrote, “If your children are.” tireslet them read your will before you sign it.” (emphasis in original)

This doesn’t just apply to multi-billionaires like him. Buffett said that this principle should be followed by “all Parents, whether they have modest or overwhelming wealth.”

The Berkshire leader followed with some concrete advice and the reasoning behind it:

Make sure each child understands both the logic of your decisions and the responsibilities they will face after your death. If any If you have any questions or suggestions, listen carefully and adopt those that you think make sense. You don’t want your children to ask “Why?” regarding testamentary decisions when you are no longer able to answer them.

Buffett added that he and Charlie Munger, his late business partner and a man to whom he credits much of his own success, have experienced many instances of family discord over wills. He attributed this largely to the lack of dissemination to beneficiaries.

“Jealousy and real or imagined slights during childhood increased, especially when sons were favored over daughters, either financially or because of important positions,” he wrote. There is no better way to destroy relationships within a family, especially a family that should be doing well in the end.

Buffett knows what he’s talking about. He has fathered three children, all of whom are of advanced age (Susan is 71, Howard just celebrated his 70th birthday and Peter is 66) and have offspring of their own. Warren said that over the many years he has had a will in place, he has answered questions and heard comments from all three. He said he often adopted the suggestions.

Fulfillment of the promise

These comments appeared in a Berkshire press release, perhaps not coincidentally, a month before Christmas. The subject of the press release was the CEO’s recent move to give away most of his fortune following his death. In 2010, he co-founded The Giving Pledge with Bill Gates. This is a charitable campaign designed to inspire high net worth individuals to donate at least 50% of their wealth to charity.

Buffett leads by example and has pledged to donate over 99% of his wealth to such causes. The latest component of this, as described in the press release, is the conversion of 1,600 Berkshire A shares into 2.4 million B shares. The latter was to be donated to four Buffett family foundations dedicated to various charitable activities.

As he passes on these assets to his descendants, we can be sure that there were discussions about how they would handle the immense responsibility given to them. If Buffett diligently followed his own advice, it is likely that this transfer would occur smoothly and peacefully, without the destructive power struggles that have torn many families apart throughout history.